Tax breaks for startup investors in 2026: Italy vs the United States

Ask a business angel in Milan and one in San Francisco what the taxman gives them for backing a startup, and you’ll hear two very different answers. The Italian gets part of the money back with the next tax return. The American may pay nothing on the gain if the company does well, but only years later, when the shares are sold.

This year the gap got wider. Italy’s main incentive has been frozen since January, while the US had already made its own more generous in July 2025. Below: what each country offers right now, the traps worth knowing, and why any of it matters when a round mixes Italian and American money. One caveat before we start: this is general information, and your adviser has the final word on your own case.

New to all this? Read the beginner’s map first: it goes from zero to a first round. Keep the startup glossary in another tab for the jargon.

Italy: what still works in 2026

The incentive investors can actually use this year is the de minimis one. An individual who puts money into an innovative startup (a startup innovativa, listed in the special section of the business register) can deduct 65% of it from their income tax. The cap is €100,000 invested per tax year, so the most anyone saves is €65,000, and the shares have to be held for at least three years.

The paperwork runs both ways. On the company side, the startup must still be within three years of registration, and it has to file on the MIMIT platform (the Ministry of Enterprise) before the money arrives, not after. On the investor side, the deduction goes in the tax return. Deduction bigger than the tax you owe? The leftover turns into a tax credit. Two limits to keep in mind: one startup can collect at most €300,000 of this aid over three years, and anyone holding more than a quarter of the company is out.

Two details changed last year. The rate was 50% until the end of 2024 and is 65% now. And innovative SMEs, which used to qualify, were dropped: only innovative startups count. If you’re still sorting out which public money fits your company, our guide to Smart&Start Italia covers the main programme for early teams.

The 30% deduction is on hold

Most people in the ecosystem grew up with a different incentive: 30% back on investments of up to €1 million a year for individuals, and a 30% deduction from taxable income, up to €1.8 million, for companies. Same three-year lock-in. The article is still in the law. What’s missing is Brussels: the state-aid approval behind it ran from 2017 to the last day of 2025, and it hasn’t been renewed.

In June, industry minister Adolfo Urso said Italy had begun notifying a new version to the Commission, hoping to make it apply from 1 January 2026. By early October nothing had been approved. So the picture is simple, if a bit frustrating: money invested by 31 December 2025 keeps the 30%, and everything since is in limbo.

United States: QSBS after July 2025

Across the Atlantic the logic is reversed. Nobody gets a deduction for writing the cheque. The reward comes at exit: under Section 1202 of the tax code, gains on qualified small business stock (QSBS) can be partly or fully tax-free. The reconciliation law signed on 4 July 2025 sweetened the deal for shares issued after that day.

• After three years, half the gain is tax-free. After four, three quarters. After five, all of it.
• Each investor can exclude up to $15 million per company, or ten times what they put in if that’s higher. From 2027 the figure moves with inflation.
• The company can’t have more than $75 million in gross assets when it issues the shares, up from $50 million.

Older shares, issued on or before 4 July 2025, stay under the old regime: nothing tax-free before five years, a $10 million cap, a $50 million asset ceiling. Some things never changed. The issuer has to be a US C corporation. The shares have to come straight from the company, not from another shareholder. Most of the assets must serve an active business. And whole sectors are shut out, from consulting and finance to law, accounting and health. One more catch: this is federal, and California doesn’t recognise it.

Italy and the US side by side

	Italy (innovative startups)	United States (QSBS)
How it works	65% deduction on the amount invested	Exclusion of the gain when shares are sold
When the investor benefits	In the tax return for the year of the investment	On sale, after three to five years
Cap	€100,000 invested per year	The greater of $15 million or 10× the investment, per company
Minimum holding	3 years	3 years for 50%, 5 years for 100%
Who can issue	Italian innovative startups in their first 3 years	US C corporations with gross assets up to $75 million
Main exclusions	Stakes above 25%, startups past their third year	Consulting, finance, law, health and other service fields

What it means for founders raising across borders

The first point is structural. An Italian S.r.l. or S.p.A. can’t issue QSBS, because the rule only covers US corporations. A Delaware C corporation, for its part, can’t be registered as an Italian innovative startup. So the country where the company is incorporated decides which break its investors can use.

That matters when a round mixes investors. A US angel backing an Italian company won’t get QSBS, and an Italian angel investing in a US parent won’t get the 65%. If you’re thinking about a US holding company later on, bring advisers in early: changing the structure after a round is expensive and has tax consequences of its own.

The second point is timing. With the 30% regime paused, Italian investors who were counting on it may wait or write smaller cheques. If your startup qualifies for the 65%, file on the MIMIT platform before closing, not after, because a missed filing means no deduction. Our guide to raising capital in Italy goes through the other sources of money and the order in which founders usually approach them.

The third point is the business model. Both systems leave out companies whose main business is consulting, so a startup built around advisory work may get neither.